Automotive Finance Market Size, Share & Trends Report

Automotive Finance Market Size, Share & Trends Analysis Report By Provider Type (Banks, OEMs), By Finance Type, By Purpose Type (Loan, Leasing), By Vehicle Type, By Region, And Segment Forecasts, 2021 - 2028

  • Published Date: Feb, 2021
  • Base Year for Estimate: 2020
  • Report ID: GVR-3-68038-861-9
  • Format: Electronic (PDF)
  • Historical Data: 2016 - 2019
  • Number of Pages: 160

Report Overview

The global automotive finance market size was valued at USD 232.09 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 7.0% from 2021 to 2028. The market growth can be attributed to the increasing investments in autonomous vehicles across the globe. Autonomous vehicles provide safety and convenience to the drivers, encouraging heavy R&D investments from numerous end users. Moreover, the investments in autonomous vehicles involve financing from credit unions, dealers, and banks, which in turn surges the demand for automotive financing as well. Growing new customer registrations coupled with a rise in the sale of the automobile is further expected to propel the market growth.

U.S. automotive finance market size, by provider type, 2016 - 2028 (USD Billion)

The increased usage of automotive financial services has led to the reduction of the time needed for leasing or buying a vehicle. Numerous automotive companies are focusing on adopting risk management practices and advanced data analytics models to effectively develop a plan to identify the sale price of returns. These aforementioned factors are expected to contribute to the market growth.

The increase in cab service financing is expected to drive the market growth over the forecast period. Cab service financing is widely used to form a financing program. This program offers weekly rentals, flexible leases, and discounts for the procurement of new cars to potential drivers. Moreover, the increase in cab service financing is fueling the growth of automotive financing, thereby driving the market.

The number of automotive finance customers is growing due to advancements in blockchain technology, superior telematics, an increase in the usage of online services, and the emerging trend of digitalization. Customers are looking to obtain hassle-free and quick financing for used or new vehicles. Moreover, customers are opting for finance providers who provide data-driven consulting services. Furthermore, these services help determine a financial scheme as well as suitable vehicles that best suit the requirements and interests of the consumers.

The outbreak of COVID-19 is anticipated to have an adverse impact on the market. The economic uncertainty has forced car buyers to postpone their purchase of a new vehicle. Despite the slowdown in car sales, auto lenders will have to accommodate an upsurge in servicing activity, such as refinancing and extensions. Auto lenders are adopting digital tools to expedite the service processes remotely.

Provider Type Insights

The banks' segment led the market and accounted for more than 57.0% share of the global revenue in 2020. The banks' segment growth can be attributed to the fast-processing features with the necessity for least documentation, in addition to the high-reliability features. Earlier, banks are used to finance only around 70% to 80% of the total vehicle price. However, currently, these banks are offering 100% finance of the vehicle, owing to which customers are showing more interest in purchasing a new car over the used car.

The OEMs segment is anticipated to register the highest growth over the forecast period. Automotive OEMs provide better after-sales services due to the availability of identical automobile parts, like that of the vehicle financed, for repair or replacement. Also, OEMs are considered as the future of mobility, owing to their positive impact on new business models. Furthermore, apart from providing products and services, OEMs are focusing on expanding their offerings to include automobile insurance as well.

Finance Type Insights

The direct segment dominated the market and accounted for more than a 56.0% share of the global revenue in 2020. Consumers are focusing on determining the financing source, which effectively meets their requirements. Consumers directly apply for car loans at the credit union, banks, and other lending companies. Moreover, the customers have complete control over the lending process as this process doesn’t include any third-party salesperson or dealer.

The indirect segment is anticipated to register the highest growth over the forecast period. The most important benefit of this indirect finance type is that it allows customers to take on-site expert advice from independent finance specialists. Also, these specialists ensure that their clients determine the best method to finance a vehicle as and when required. Also, in indirect auto financing, customers can access and search all loans at once.

Purpose Type Insights

The loan segment led the market and accounted for more than 60.0% share of the global revenue in 2020. Loans have been a standard process of purchasing an automobile by most of the global population. As the credit environment started to advance, leasing and finance companies had extra funding sources to make accessible to consumers. Moreover, banks and credit unions are targeting customers with low-interest rate loans.

The leasing segment is anticipated to register the highest growth over the forecast period. The segment growth can be attributed to the increasing number of leasing providers in emerging economies, such as India, China, and Japan. The growing trend of digitization is making a massive impact in the automotive leasing industry. Moreover, companies in automobile leasing are enhancing consumer experience and leveraging their profit margins by heavily investing in digitization technologies, such as blockchain.

Vehicle Type Insights

The passenger vehicles segment led the market and accounted for more than 62.0% share of the global revenue in 2020. The segment growth can be attributed to the increasing number of females driving vehicles, surge in the new passenger car registrations, and the emergence of new generation riders. The automotive industry is growing due to the constantly changing customer needs. The need for innovations in safety systems, infotainment systems, advanced driver-assistance systems, telematics, autonomous vehicles, and in-dash controls is increasing, especially in passenger vehicles.

Europe automotive finance market share, by vehicle type, 2020 (%)

The commercial vehicles segment is anticipated to witness significant growth over the forecast period. As commercial vehicles are expensive in comparison to other vehicles, numerous banks and financial institutions have introduced reasonable loan schemes, which include simple terms and conditions. Moreover, the processing time needed to approve commercial vehicle loans is less in comparison to passenger vehicles. These aforementioned factors are expected to contribute to the segment growth over the forecast period.

Regional Insights

Europe dominated the automotive finance market and accounted for more than a 39.0% share of the global revenue in 2020. The regional market growth can be attributed to the presence of a large number of automotive finance service providers in the region. Numerous market players in the market are focusing on offering their services through mobile and online channels. This initiative is giving these players an edge over traditional players.

Asia Pacific is expected to emerge as the fastest-growing regional market over the forecast period. The growing number of favorable government initiatives in economies, such as India, Japan, and China, to promote growth in the automotive industry and maintain consumer interest is expected to create growth opportunities for the regional market growth. The region is witnessing an increasing sale of vehicles. This, as a result, is expected to drive the regional market growth.

Key Companies & Market Share Insights

The market is fragmented in nature. The market is in the growth stage, and also the competition is anticipated to intensify over the forecast period. Prominent players are adopting various strategies, such as partnerships, strategic joint ventures, mergers & acquisitions, geographical expansion, to cement their foothold in the market. The emerging subscription business is altering the market dynamics.

Industry players are focusing on exploring this subscription business model, as consumer interest is very high in purchasing vehicles. The appeal of subscriptions is fueling higher growth rates in the market. The COVID-19 pandemic has augmented the growth of online and digital channels for business-to-consumer purchases. In reply to these trends, OEMs and industry players have started to virtualize their dealerships or agreements and operate remotely. Some prominent players operating in the global automotive finance market include:

  • Ally Financial

  • Bank of America

  • Capital One

  • Chase Auto Finance

  • Daimler Financial Services

  • Ford Motor Credit Company

  • GM Financial Inc.

  • Hitachi Capital

  • Toyota Financial Services

  • Volkswagen Financial Services

Automotive Finance Market Report Scope

Report Attribute

Details

Market size value in 2021

USD 245.62 billion

Revenue forecast in 2028

USD 394.06 billion

Growth rate

CAGR of 7.0% from 2021 to 2028

Base year of estimation

2020

Historical data

2016 - 2019

Forecast period

2021 - 2028

Quantitative units

Revenue in USD billion and CAGR from 2021 to 2028

Report coverage

Revenue forecast, company market share, competitive landscape, growth factors, and trends

Segments covered

Provider type, finance type, purpose type, vehicle type, region

Regional scope

North America; Europe; Asia Pacific; Latin America; MEA

Country scope

U.S.; Canada; Germany; U.K.; China; India; Japan; Brazil

Key companies profiled

Ally Financial; Bank of America; Capital One; Chase Auto Finance; Daimler Financial Services; Ford Motor Credit Company; GM Financial Inc.; Hitachi Capital; Toyota Financial Services; Volkswagen Financial Services

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Segments Covered in the Report

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2028. For the purpose of this study, Grand View Research has segmented the global automotive finance market report based on provider type, finance type, purpose type, vehicle type, and region:

  • Provider Type Outlook (Revenue, USD Billion, 2016 - 2028)

    • Banks

    • OEMs

    • Other Financial Institutions

  • Finance Type Outlook (Revenue, USD Billion, 2016 - 2028)

    • Direct

    • Indirect

  • Purpose Type Outlook (Revenue, USD Billion, 2016 - 2028)

    • Loan

    • Leasing

    • Others

  • Vehicle Type Outlook (Revenue, USD Billion, 2016 - 2028)

    • Commercial Vehicles

    • Passenger Vehicles

  • Regional Outlook (Revenue, USD Billion, 2016 - 2028)

    • North America

      • U.S.

      • Canada

    • Europe

      • Germany

      • U.K.

    • Asia Pacific

      • China

      • India

      • Japan

    • Latin America

      • Brazil

    • Middle East & Africa

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